Your cup of coffee may cost '50 or 80c' more, as milk prices go up in cafes

For many Australians who enjoy coffee to get through the day, another price hike in the cost of living is coming your way.

Despite rising milk prices, a cafe near you may want to charge more for a cup of coffee.

Key points:

• A cafe in Hobart says it will raise the price of its coffee by between 50 and 80 cents a cup
• The price increase follows the increase in the cost of milk, which dairy farmers say has been happening for a long time
• Coffee lovers say they are happy that dairy farmers are receiving more for their product

Hobart cafe owner Sue Stagg says her customers will soon pay extra — “50 or 80 cents per cup”.

Mrs Stagg and her staff make about 8,000 copies a week.

They use 1,300 liters of milk per week — and the price of milk goes up.

“Prices of everything went up, coffee, milk, packaging, everything went up,” said Mrs Stagg.

“We support local [milk] suppliers and they are considering increasing their prices with us,” said Mrs Stagg.

“Everyone has to pass it along the lines.”

Sue Stagg said coffee prices would rise 50 to 80 cents at her cafe.(ABC News: Maren Preuss)

What do coffee drinkers think?

David Gentle was a regular at Mrs Stagg’s Hobart cafe.

“I guess it’s inevitable; everything goes up … but we also don’t want to pay too much, because we want to enjoy our coffee.

“If I go to farmers, I pay, but if I go to middlemen I don’t,” he said.

Coffee drinker David Gentle is happy to pay a little extra for his coffee if the farmer gets more, but he doesn’t want the price to rise too high.(ABC News: Fiona Breen)

Bonnie Lowan says she’s happy that cafes and farmers are getting more.

“I think this is a necessary increase. As prices go up for businesses, it needs to increase for customers – businesses can’t just accumulate costs themselves,” he said.

Some coffee drinkers say they may reduce the amount of coffee they drink each day, but Sam Ling says he will continue to drink two or three coffees at any cost.

“I’m a coffee addict, that [the price rise] shouldn’t have much of an impact at all,” he said.

Self-confessed coffee addict Sam Ling says the price hikes won’t affect how much coffee he drinks each day.(ABC News: Maren Preuss)

‘Long coming’

Although it may hurt consumers’ pockets, dairy farmers are relieved. They say milk is finally rewarded.

“It’s been a long time coming; dairy farmers are finally getting paid milk which reflects the amount of work and effort we put into producing the quality milk we produce,” said northeastern Tasmanian dairy farmer Cheryl McCartie.

“We currently … earn about 70 cents per liter on the farm.”

Dairy farmer Cheryl McCartie says she knows the high prices won’t last forever.(ABC News: Craig Heerey)

Input costs in agriculture for things like fertilizer, fuel, shipping and wages rose about 30 percent.

“We’re good at keeping costs down … but, when they’re out of your control, having good milk prices means we can actually still invest in our farms and our people, and in things that help the environment,” said Mrs McCartie.

Mrs McCartie and her husband Theo have lived through some lows in the dairy industry: in 2011 when supermarkets cut milk prices by a third with a $1 per liter dairy campaign, led by Coles, payments to farmers were cut.

Then in 2016, processor Murray Goulburn ran into financial trouble and retrospectively cut the price of milk, meaning farmers were paid less than production costs.

The rise in milk prices has been “a long time coming”, said dairy farmers.(ABC News: Maren Preuss)

McCarties is thinking of leaving the industry. Many farmers left and Australia’s milk production fell by about a billion liters over five years.

In 2022, production is still declining, sparking a frenzied bidding war between processors.

Janine Waller of the Australian Dairy Processors Association said milk supplies had fallen.(provided)

Janine Waller of the Australian Dairy Processors Association said that in the past year, milk supply fell 3.5 percent, and is projected to fall another 1 percent.

“We’re all competing for milk, which is why we’re seeing the high prices we have with this opening milk price season,” Waller said.

Mrs McCartie said she was happy to have stuck with the industry.

“I’m also a realist and know that high prices won’t always stay there,” he said.

“So we are very careful about using this to reduce the risk.”

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